What Is the Difference Between HRIS, HRMS, and HCM?
One way to think about these terms is chronologically. As workforce needs have evolved, especially over the last few years, technology has advanced to meet those needs. Where an HRIS was once cutting edge, now an HCM solution refers to a more modern suite of software. HRMS is somewhere in between.
The other way to tell the difference between HRIS, HRMS, and HCM is by looking at functionality.
A Human Resource Information System (HRIS) is generally the starting point. This core administrative system leverages technology to make storing and retrieving employee information easier. Typically, HRIS covers the bases like benefits and compliance data, but payroll may be handled through a separate system that is integrated with your HR software.
A Human Resources Management System (HRMS) was originally intended to address talent management gaps in existing HRIS packages, like onboarding, career development, and learning management. Over time, HRIS platforms expanded to include many of these functions, so the line between an HRIS and an HRMS has blurred. Today, there’s not much difference between the two systems, but there’s a good chance your IT stakeholder is more familiar with the term HRIS, even though that’s the older acronym.
Human Capital Management (HCM) is a more comprehensive approach that brings together best HR practices and the technology to facilitate them. In addition to providing the same functionality as an HRIS or HRMS, an HCM solution also offers strategic support across the entire employee lifecycle.
The Benefits of HCM Compared to HRMS or HRIS
There are several features of an HCM solution that set it apart from HRIS and HRMS. That doesn’t necessarily make HCM the right solution for your company. It really depends on the business outcomes you need to achieve.
The differentiating components of an HCM solution are:
- A flexible, end-to-end platform. Delivered on the cloud through a software-as-a-service (SaaS) license agreement, a modern HCM solution is more comprehensive, easier to scale, and more cost-effective than legacy systems.
- A single employee system of record. This is the foundation of an integrated solution. It powers the complete employee lifecycle, from hire to retire.
- Broad functionality. Not only does an HCM automate and streamline core processes like payroll, personnel management, and benefits administration, it also supports talent and workforce management strategies with recruiting, onboarding, learning, time and expense management, and compensation.
- Tools to create meaningful employee experiences. These tools are designed to help employees feel connected through video, chat, peer recognition, surveys, and self-service options.
- Reporting and analytics. A complete HCM solution connects data to business goals, like time and cost savings, turnover trends, and diversity and inclusion initiatives. Advanced analytics like Paylocity’s Modern Workforce Index use peer benchmarks and artificial intelligence (AI) to offer prescriptive recommendations.
According to TechTarget, companies today are looking for a technology solution that not only serves the HR department but also the needs of all employees. Because workforce dynamics continue to shift, HR practitioners and executives alike want to invest in a system that can adjust and grow with the company.
